E-commerce

Why and How Businesses Are Integrating the Buy Now Pay Later System?

  • Published on : April 10, 2023

  • Read Time : 11 min

  • Views : 2k

Buy Now Pay Later

Have you ever gotten stuck in a situation where you are making an online purchase payment but you’ve lost your access to any debit/credit cards to buy products? Sometimes such scenarios spoil the charm of the moment and also affect your shopping plans.

Then, how do you satisfy your desires of fulfilling your Wishlist? Introduce yourself to the new mode of payment i.e. Buy Now Pay Later (BNPL). This method allows customers to complete their purchase process without even waiting for payment access.

The new trend is mainly used by the audience to buy everyday products right from groceries, and clothing to all other expensive lists of items. Using this method, users get the leverage of making a limitless purchase quickly and conveniently.

With the wide acceptance of this BNPL system, retailers are now planning to integrate this system and use a great opportunity to work in the market.

Let us go deep into the blog to know more about BNPL’s meaning, process, and reasons to use it in the business:

What Is Buy Now Pay Later?

Buy Now Pay Later is a payment method that is used by customers to purchase their daily use commodities on a credit basis without even using a credit card. This method is a type of loan whose repayment is done in installments after a certain period.

The reason for the popularity of this method is that it offers immediate access to finance product purchases without any delay. There are a variety of options available for loan repayment which are totally based on the total loan amount and the type of item purchased.

The most popular type of buy now pay later software integration options includes Afterpay, Paypal, Klarna, Affirm, and Shopify.

How Does Buy Now Pay Later Work?

The process of BNPL app works in these simple steps for both customers and retailers:

How Does Buy Now Pay Later Work

1. Customer Add the Items and Move to The Checkout Window

The BNPL process begins in a similar way as the other transactions are being performed. The customers get the option to complete the payment using BNPL which can be very quick and convenient.

2. Available BNPL Options Are Displayed by Retailers

When the customer is going to check out from the transaction, he/she will have the option to opt for the BNPL payment method just like other available credit/debit card methods.

3. Soft Credit Check Is Being Processed on The Customer

Once the customer chooses to opt for the BNPL method, the customer needs to fill up some of their personal details to provide authenticity to the BNPL money lender like name, address, contact number, etc.

After the customer is done with details, the BNPL lender runs a quick credit check on the customer’s information to get surety on the expected time and ability of loan repayment. Once the process is done, the vendor can easily move ahead in the process.

4. Owner/Vendor of BNPL Puts A Charge/Fee on The Retailer

A small percentage of the overall transaction is taken by the BNPL vendor which is directly paid to the retailer. The fee amount generally falls between 2%-8% which is deducted from the total sum of the transaction. The process is followed similarly as it used to be followed by credit card companies in previous times.

5. Balance Amount Is Being Paid Off by The Customers Over Time

Majorly, the BNPL process is interest-free for the customer in case they are able to repay the whole amount within 30 days. Or in case, if the customer takes much time to repay then, the BNPL vendor may share the lists of interest and different repayment plans.

It is very similar to the traditional credit card payment where the tenure of loan repayment decides the overall interest rate charged on the loan amount.

Explain the List of Reasons to Add BNPL (Buy Now Pay Later) On the E-Commerce Site

The buy now pay later software integration process not only benefits the consumers but is very effective for e-commerce retailers and bnpl apps as well. Let us see the impactful reasons why e-commerce sites should use Buy Now Pay Later:

add-bnpl-in-ecommerce-site

1. Attracts A Huge Target Audience

The convenience of buying today and paying later is luring a huge audience base. Every other customer is opting for the buy now pay later method because of the no-interest features. After witnessing such excessive growth and demand for the buy now pay later method, retailers are opting to enhance their sales strategies.

Moreover, customers are also actively looking for stores that are offering them the option to use a super convenient mode of payment.

2. Builds A Strong Trust

No retailer like to offer a product trial service but by using a buy now pay later service, users can easily leverage the service. The ‘buy now pay later’ service does not bind the customer to buy the product, rather customers can try it and decide whether to buy it or not.

If the product fits their expectations then they can complete the purchase using the buy now pay later method or else they can return it without even thinking about the refund.

At the initial stage, the free return system may cost more but in the long run, it will help in building better customer relations and a sense of customer loyalty.

3. Decreases the Number of Cart Abandonment

The major reasons for the increase in cart abandonment are the poor payment options that frustrate the customers and force them to leave the items in the cart. However, adding a payment option of buy now pay later makes the checkout process simple and convenient. Using this method, customers do not have to indulge in the rush of adding card details. Just a simple option can fulfill the intention of the customer.

Other reasons to display how BNPL helps in reducing cart abandonment are customers need not to create an account to pay and do not have to share their card details with any untrusted site.

4. Ensures Customer Retention with Better Credit Solution

The BNPL method is good, especially for people who want to buy things on credit because there is no interest charged for the credit amount. This method allows customers to get relief from the budget constraint. Even if the customer is exhausted with the finances, the BNPL method allows them to make a quick purchase.

Moreover, the BNPL method is more suitable for customers because it is a better and safer form of getting credit. And thus, the customers get the freedom to become repeat customers by continuously using the BNPL method to complete the payment religiously.

5. Increases Overall Sales Margin

When the customer gets the freedom to make a purchase without paying immediately then they are more likely to repeat transactions which ultimately increases the sales margin of the retailers.

The BNPL makes the consumer confident about delayed payment and thus customers get the privilege to purchase even the high-priced product. So, now when a customer is going to purchase any product using BNPL, they need not to check their account balance, rather they can simply make the purchase.

Buy now pay later ensures that no customer is dropping any purchase because of the insufficient account balance at the moment rather they can split the total amount into small chunks and pay accordingly.

6. It is Highly Competitive

The market of “buy now pay later” is already high and giving unexpected results to all. Almost all organizations have successfully integrated BNPL into their checkout system. But if anybody has missed it then they are soon going to adopt this new trend.

Therefore, if you are planning to corner the market then you need to deliver services as per the customer expectations and fulfill the better market demands.

Top Reasons to Explain Why Buy Now Pay Later Is Suitable for Customers

The popularity of the buy now pays later method has skyrocketed in the market and therefore it is essential to educate the target audience about how the new trend can benefit customers.

  • Customers can benefit from the increased level of affordability
  • Customers can choose the repayment duration at their convenience
  • Customers can get instant access to the credit amount opted to buy the product
  • Customers can ensure a safe and secure process of transaction
  • Customers will get access to pay no-cost EMI
  • Customer will be able to follow the simple and transparent method of repayment

Summing Up!

Buy now pay later is a thoughtful solution for both e-commerce retailers and customers. It allows customers the convenience of buying products for which they have to pay later. E-commerce retailers are excessively using the method because it engages a huge audience base by allowing them access to buy expensive or emergency products.

So, integrating the Buy now pay later system will definitely help in increasing the sales volume and fulfilling business targets to great extent.

Also, the business will provide you with an effective way to enhance and share the pain of the huge audience who usually struggles with a large purchase. However, before you land on the final decision, it is suggested that you must calculate the extra cost that will be incurred by your business in the near future.

    Let's talk about your project!

    Featured Blogs

    Read our thoughts and insights on the latest tech and business trends

    Machine Learning In Healthcare: Applications, Benefits & Future Trends

    The way we take care of people's health is changing swiftly! Instead of just using tools like scalpels and stethoscopes, doctors are now using super smart computer programs called artificial intelligence, especially one called machine... Read more

    Overcome Digital Transformation Challenges in Large Organizations

    Change is happening fast in the digital world, and for large organizations, it's like climbing Mount Everest – tough, challenging, but definitely worthwhile. Don't worry, though! Even though the journey to digital transformation can be... Read more

    Top AI Trends Lighting Up Innovation 2024

    2024 is set to be a significant year for top AI trends, especially generative AI, following its explosive emergence in 2022 and initial business exploration in 2023. This year, the focus is on making AI... Read more